Why Not Web Analytics?

Whether you're just starting to implement an analytics strategy within your organization or a seasoned pro, the true value of analytics is in the planning. A carefully designed strategy will allow companies to track performance and gauge effectives on business initiatives, while providing a benchmark for success.

By John Lovett
06/06/07 4:00 AM PT

Has your company defined a Web analytics strategy yet? If your answer is no, then ask yourself: Why not? Companies with defined analytics programs are realizing double-digit growth in new Web site visitors, returning visitor traffic and conversion rates. The barriers to entry for adopting analytics technologies that can dramatically improve online businesses have never been lower.

Web analytics evangelism is rampant and vendors like Google are making the tools available for free to businesses adopting Web analytics. These tools -- although lacking much of the functionality, sophistication and integration capabilities of the commercial products available -- are a great place to start.

Free tools -- what's the catch? The catch lies in the need to build a strategy around analytics so that the metrics measured are meaningful to your business.

So, Where Do You Start?

Aberdeen recently surveyed companies to identify analytics metrics that hold the greatest value in tracking customer behavior, gaining a better understanding of customer actions and improving the customer experience. The metrics surfaced across three key areas of the customer lifecycle:

Attract: All companies doing business online face the challenge of attracting new visitors to their Web sites.

Convert: Once a consumer lands on a given Web site, the goal is to get them to convert from a visitor to a viable customer or consumer of information.

Retain: Once a new customer is acquired, the real challenge is getting them to visit again and to visit often.

For each of the customer lifecycle stages, Web analytics plays a strategic role in measuring success and alerting companies to vulnerabilities within their online environments. The value of Web analytics solutions is not in their ability to collect data, but to measure customer behavior which provides a basis for replicating success or driving change.

KPIs to the Rescue

Most discussions about analytics include the value of key performance indicators (KPIs). Much like business processes, companies should identify and track KPIs that impact their business. Metrics for e-commerce sites will be different from media sites or information-only sites.

So, identifying and measuring KPIs that matter to your business is critical. Aberdeen used year-over-year improvement in a sample of KPIs applicable to multiple industries to distinguish best-in-class companies from industry average and laggards, including process measures, (i.e., percentage of new visitors, average visit duration and percentage of returning visitors), and quality measures, (i.e., average number of page views per visit, customer conversions and number of visits for existing customers).

The Results Are ...

Best-in-class companies that adopt a culture of analytics and establish business processes around the use of analytics demonstrated the greatest performance gains. Among companies that utilize analytics in this way, 75 percent increased new visitors to their sites, 78 percent improved average visit duration and 65 percent improved returning visitors.

Each of these improvements cannot be attributed to the use of analytics alone, but analytics provided the basis by which to measure and track the performance. Further, when metrics go south -- or don't deliver on expectations -- Web analytics tools have the ability to put up flags announcing problems and providing an immediate call to action.

Attaining Best-In-Class Status

Survey results show that the firms enjoying best-in-class performance shared several common characteristics with respect to their Web analytics implementation strategy, such as:
Eighty-nine percent of best-in-class companies currently use or plan to use analytics as a method to measure corporate goals such as achieving sales and marketing objectives and elevating customer experience. This majority group uses analytics data to influence decisions and impact change across multiple business units.

Eighty-nine percent of best-in-class companies will make analytics data available to all levels of management within their organizations through dedicated analysts or self-service methods. Ninety-one percent of these firms will make analytics data available for export to other applications such as CRM systems, BI (business intelligence) platforms or Excel spreadsheets.

In most cases, full-scale Web analytics acceptance starts with a top-down approach, where the use of analytics is mandated or required by senior management. Ninety percent of companies surveyed indicate they have enlisted support from senior management -- or plan to do so -- for Web analytics initiatives.

Yet, with today's tools employees responsible for Web initiatives can demonstrate the value of analytics by creating reports such as conversion effectiveness demonstrating which paths lead to the greatest profits. Additionally, eager analysts can demonstrate content value with traffic reports and show how improvements occur over time.

Off and Running

The value of analytics is not just in the measurement of the data but in the ability to act on the results. To do this, companies must dedicate resources to analyzing the data, trends and results. Although analytics use is widespread, there is still time to adopt an analytics strategy and drive a competitive advantage for your business. Yet, resources and dedication are keys to making a program work.

To this end, 27 percent of best-in-class companies are devoting full-time staff specifically responsible for managing analytics and delivering the results to the right people within their organizations in understandable reports. Increasingly, companies are also looking outside their organizations and hiring consultants to help establish analytics programs and recognize returns on their technology investments.

So, whether you're just starting to implement an analytics strategy within your organization or a seasoned pro, the true value of analytics is in the planning. A carefully designed strategy will allow companies to track performance and gauge effectives on business initiatives, while providing a benchmark for success.

John Lovett is an e-commerce research analyst at
Aberdeen Group. He focuses on e-commerce as it relates to the business environment, including the B2C (business-to-consumer) landscape. Areas of research include e-commerce platforms, search technologies, Web analytics, content and publishing management tools, and transaction engines necessary to conduct business online.